Slovenia to Guarantee EU4 Billion to Stabilize Banks

Sept. 13 (Bloomberg) -- The Slovenian government said it
will guarantee as much as 4 billion euros ($5.16 billion) to
help recapitalize its banking industry, which is struggling with
rising bad loans, Finance Minister Janez Sustersic said.

The euro-region nation plans to form a special government
agency that will take on bad loans from the ailing financial
industry, including the two state-owned banks Nova Ljubljanska
Banka d.d. and Nova Kreditna Banka Maribor d.d. In return, the
agency would issue bonds guaranteed by the government.

“We estimate that we will not need more than 4 billion
euros to stabilize our banks, this should be the top ceiling,”
Sustersic told reporters in Ljubljana today.“Each bank that
will participate in transferring bad liabilities to this company
will have to agree what will it do after the transfer, how will
it improve its business performance. ”

Slovenia’s banking industry is at the center of investors’
concern that the country may be the next in the euro region to
ask for an international assistance package to prop up its
financial system. The banks in the former Yugoslav republic are
solvent even though the situation is worsening, central bank
Governor Marko Kranjec said yesterday, according to Finance
newspaper.

Abanka Vipa d.d., the third-biggest lender by assets,
canceled a plan to raise 50 million euros by selling new shares
after poor demand from investors, which purchased only 1.4
percent of the stock for sale.